Which Gold or Silver Bullion to Buy?

Bullion Gold and Silver Bars

Bars are the most cost-effective and recommended form to accumulate investment-grade precious metal. They carry the lowest premium compared to coins or collectables, because they're in the rawest possible form - casting bars in particular require minimum fabrication, which keeps costs down.

In some markets you may see rounds offered as well - gold or silver bar metal, minted in round format. Rounds are the second closest to bars in terms of cost. However, even though rounds share bullion purity, they're not recognized as investment precious metal in Malaysia and are therefore subject to import tax and GST.

Mints producing gold or silver bars usually come from mining, metal recycling, or financial industries. Popular hallmarks include PAMP Suisse (Switzerland), Asahi Refining (Japan), Johnson Matthey (British), Republic Metals Corporation (USA), and Engelhard (USA/Australia).

Bullion Gold and Silver Coins

Coins are bullion rounds that carry legal tender status from their country of origin. Widely popular examples include American Eagles, Canadian Maples, Australian Kangaroos and Chinese Pandas. Malaysia's own gold bullion coin is the Kijang Emas, distributed only by banks appointed by Bank Negara.

Coins carry a higher premium over bars because of their legal tender status - most are beautifully designed, engraved and produced to represent the craftsmanship of the issuing country, and that sophistication raises the cost.

Mints that produce legal tender coins are mostly government-owned or government-linked: the Royal Canadian Mint (owned by the Canadian government) makes Canadian Maples and Royal Canadian Bars; the Perth Mint is owned by the Western Australian state government; China's Mint, maker of the famous Panda coins, is owned by the Chinese government.

Both gold and silver coins are exempt from GST, but silver coins are subject to a 5% import tax, immediately raising the cost of silver bullion coins - gold coins carry no import tax.

Collectable Gold and Silver

Collectable gold and silver comes in various forms - coins, bars, or odd shapes such as an animal or a country's outline. All collectables are limited in number, ranging anywhere from 1 to 300,000 pieces; the lower the number, the higher the premium, due to scarcity.

Collectables carry unlimited upside potential. One example: the 2007 Mongolian Togrog Gulo Gulo Wolverine 1 oz silver coin. Limited to 2,500 pieces, it sold for USD $100 when first released by the National Bank of Mongolia. Awarded Coin of the Year in 2009, its price rocketed - today, a piece would cost around USD $2,000.

The Perth Mint is famous for its Chinese Lunar gold and silver coin series - a new animal design releases every year to represent the current horoscope year, a 12-year cycle that makes the full collection a 12-year continuous marathon.

Serial numbers are another possible collectable angle, commonly engraved onto gold and silver bars. Special arrangements can carry their own premium: low serial numbers (1 to 100), ladder serial numbers (such as 123456), and solid serial numbers (every digit the same, like 888888 or 999999). In rare cases, buyers will pay extra for numbers with personal meaning - a birthday, a car plate, or a spiritual preference.

We recommend collecting pieces that attract your personal preference - there's no correct formula for buying collectables. No one can know in advance whether today's purchase will appreciate. A non-performing collection has zero or minimal appreciation, and at worst is still worth the value of its metal content.

Which Size and Which Weight?

In general, bigger sizes offer better value, but here are some factors to weigh before choosing your ideal size.

For gold and silver bars, sizing options are almost endless - ranging from 1 gram to 1,000 oz (31.1 kg). But if the size is too big, it can be difficult to liquidate, transport or store. While one kilo gold bar is cheaper than ten 100-gram bars, it's easier to split 100-gram bars when selling your investment partially and separately.

We recommend gold bars between 10 grams and 100 grams, and silver bars between 10 oz (0.31 kg) and 1 kilo (32.15 oz). Coins are commonly denominated in troy ounces (31.1 gram) - we recommend the 1 troy ounce denomination, the most popular weight.

Fakes and Counterfeits

There's a worrying amount of fakes and counterfeits in the market - most commonly faking the originality of prized collectables, especially coins and limited editions. The Chinese Panda, for example, is one of the most-faked coins in the market: a genuine 1990s panda coin can be worth 10-20x its metal value, which encourages the black market to make replicas. These fakes are commonly 99.9% pure silver, because it's not the metal that's being faked - it's the collectable value.

For gold, fakes bury tungsten - a cheaper metal with almost identical weight - inside a bar wrapped in a 99.9% pure gold outer layer, engraved to match what a buyer expects. This type of fake usually appears in larger gold bars.

We strongly recommend buying your gold and silver from reputable companies with direct distribution from mints, to avoid paying for fakes and counterfeits. Be suspicious of any seller offering a price much lower than a normal operating company would.

We advise testing the authenticity of your product, especially for large-value purchases - XRF, density and ultrasound tests are all options. (For more information on testing, click here.)